Major blow for Brexit campaign as US rules out UK-only trade deal

US Trade Representative says America has no interest in a trade deal with
Britain alone, urging it to remain in the EU

United States Trade Representative Michael Froman (C) is flanked by international counterparts during the closing press conference after an agreement was reachef by twelve Trans-Pacific Partnership (TPP) member countries, in Atlanta, Georgia, USAPhoto: EPA/ERIK S. LESSER

The United States has ruled out a separate trade deal with UK if it leaves the European Union, in a major blow to Brexit campaigners.

President Obama’s most senior trade official said that America is “not in the market” for a free trade deal with Britain alone, and warned British firms could face crippling Chinese-style tariffs outside the EU.

The comments come as David Cameron pushes the EU to complete a major transatlantic free trade deal that could slash the cost of American food, clothing and computers for British consumers, as well as making it easier for British firms to export.

Downing Street says the Transatlantic Trade and Investment Partnership could be worth £10 billion a year to the British economy, or £400 per family, and will revive the entire European economy.

Prime Minister David Cameron and US President Barack Obama take part in a state welcoming ceremony on the South Lawn of the White House in Washington Photo: PAUL J. RICHARDS/AFP/Getty Images

The intervention – a hint that the White House is alarmed at the tightness of the polls – was cheered by pro-EU campaigners. The ‘Out’ campaign has always claimed that Britain would quickly win new deals around the world.

Mr Froman said: "I think it's absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity.”

"We're not particularly in the market for FTAs [free trade agreements] with individual countries. We're building platforms that other countries can join over time."

"We have no FTA with the UK so they would be subject to the same tariffs – and other trade-related measures - as China, or Brazil or India.”

New Zealand Prime Minister, John Key Photo: Getty

Hours later, however, John Key, the New Zealand Prime Minister, said that Britain could probably retain any deals his country secured with the EU following a Brexit.

Mr Key, who was in Brussels to launch talks for a free trade deal with the EU, said after a British exit, “we would want to preserve both our existing position with Great Britain and continue to grow that relationship.

“We would need to find a way through that,” he said. “The reality is there are a number of mechanisms where that would be possible.”

Sir Nigel Sheinwald, the former British Ambassador to both the United States and the EU, said: “Michael Froman's comments present those wanting to leave the EU with an inconvenient truth: that a major trade and investment partner, the US, sees no influential role for the UK in international trade negotiations if we go it alone.

“Outside the EU we would stand in line behind the big trading blocs. The US Trade Representative has done us a service by telling it like it is.”

The US bought more than £35 billion in goods from British firms last year. The EU falls under the United States’ "most-favoured-nation tariff" group, with an average rate of less than three per cent of a product’s value.

By contrast, China-made products such as car tyres and solar panels face tariffs more than 80 per cent of the products’ value in order to protect American manufacturing jobs.

Hardest hit would be the flourishing British car industry, with the US its second-largest export market after the EU.

If Britain left the EU and was not in TTIP, manufacturers such as Jaguar Land Rover would be hit by a 2.5 per cent tariff and at a disadvantage to German and Italian-made competitors.

Downing Street has warned that Britain would lose access to 52 separate EU trade deals after a Brexit, with no guarantee of replacing them.

Robert Oxley, of the Vote Leave campaign, said: “If we leave the EU there would be no change to our trade with America, but we would take back control over trade policy and would be able talk to Washington directly, instead of hoping that the EU will do it for us.”

Lord Mandelson, the former Labour business secretary Photo: GETTY IMAGES

William Dartmouth, the Ukip trade spokesman, said: "The US is nothing if not pragmatic, and when situations change, so do their positions."

China last week called for Britain to stay in the EU. Beijing has been worried about the implications of free trade-supporting Britain leaving the EU, and of any weakening of a grouping which it views as a vital counter balance to the United States, diplomats say.

Peter Mandelson, the former British EU Commissioner, last week warned that India and China would be in no rush to sign deals with an independent Britain, as they have “bigger fish to fry”.

“How would we start negotiating with China, India and other countries, which are way bigger than ours, with whom there would be a very severe negotiating imbalance? We would essentially be supplicants. We would be begging to go nearer the top of the queue.”